Abstract
Executive Summary
Advanced Advertising services are part of the third phase of an IPTV
deployment program.
These three phases consist of:
- Phase 1: Technology - Deploy the IPTV technologies and get the IPTV
service into a scalable and operational state.
- Phase 2: Content and Marketing - Gather a compelling set of
content, create packages and marketing programs that attract subscribers.
- Phase 3: Applications and Advanced Advertising - After a crititical
mass of subscribers is achieved, then applications and Advanced Advertising
services will be introduced.
This transition is important and will significantly change the revenue sources
for IPTV services. In Phase 1 and Phase 2, 100 percent of all IPTV revenue
will come from the subscribers. As the IPTV service providers move into Phase
3, they will start to move toward a situation where 50 percent of their
revenue will be generated from subscriber revenue and 50 percent from
advertising. This will clearly improve the business case for IPTV services.
The opportunity for IPTV Advanced Advertising strategies is being helped by
the challenges that the advertising industry is facing today that have been
created by the introduction of new technologies. The DVR is the most obvious
challenge that has arisen in the last few years since TiVo introduced the
first DVR device in 1999.
There has been rising mistrust and dislike of advertising by TV users. The DVR
just gave viewers a way of acting upon that mistrust and dislike by providing
a convenient way to skip ads as a by-product of time shifting TV programs in
order to watch them at a more convenient time.
The advertising industry is trying to fight the DVR by disallowing its ability
to skip ads. This is not a strategy that will be effective for very long.
There is an inevitability to technology that should be embraced rather than
attempting to suppress it.
The opportunity for IPTV service providers is to help the advertising industry
to develop new techniques and new business models that take advantage of new
technologies to provide more interesting and more effective advertising to TV
viewers. This report examines technologies and strategies that IPTV service
providers can implement to accomplish this.
In fact, the telephone companies are well positioned to to offer Advanced
Advertising services. The telephone companies already have strong
relationships with the large enterprises that fund the advertising industry to
create TV ads. The telephone companies are also major buyers of TV
advertising, so they have considerable experience and expertise in TV
advertising that they can bring to bear on these services.
Another advantage that the telephone companies have is that they tend to be
national organizations. This is true in most countries in Europe and Asia,
where both the incumbent carriers and the competitive carriers have national
networks.
This means that an advertiser can go to the IPTV company or companies in these
countries and create a comprehensive national campaign. The cable companies in
or out of North America nearly always serve only smaller regions of each
country. Often, there are multiple cable companies in each country that create
a patchwork of coverage. It is difficult to create a national campaign across
this patchwork.
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